Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Glen Yeung - Citigroup
Glen Yeung – Citigroup
It sounds like you’re guiding for strength here in Q4 and also for the first half of [2008] and I was wondering if you could just give us some specific examples of what’s generating that kind of growth, be it mix or some other factors you are undertaking?
Timothy Morse
There are a number of components as we’ve talked about in the past for gross margin, first we always talk about market segment mix. It’s difficult to precisely pin that down four and five quarters out so that contributes a little bit to the range we’ve got out there for 2009.
But by and large we’ll continue to move with market segment mix but we also have quite a bit of work that continues to go on. Yes on the basic silicon material side, but also as we’ve previously discussed packaging, logistics, assembly and test.
It is noteworthy that we have not assumed any price downs on silicon material for the second half in this outlook. It’s just; we don’t have any visibility of that so we’d prefer to go a little more conservative that way.
I think that kind of shows what we’re doing I believe.
Glen Yeung – Citigroup
When you reported the second quarter results, you had at that time suggested that potentially in Q4 you might see some growth and I wonder if you look out, obviously I recognize the world has changed, but when you look out, where specifically perhaps by end market have you seen changes?
John Daane
Two things I think that happened in Q3 changed the Q4 outlook, number one; we had guided that for Q3 we did not expect TDS CDMA to happen. It did, it pulled wireless up substantially in Q3 over Q2 and that is uncharacteristic. Typically we see in the third calendar quarter a summer slowdown broadly across communications.
We are pulling out TDS CDMA for this quarter; we don’t expect a repeat. Certainly not to the degree that we saw in Q3 and so that causes wireless to be down. Additionally in this environment we are seeing some carriers start to slow down CapEx deployments in the wire line access area and so we’ve pulled that down particularly for both North America and Japan.
Secondly we also in Q3 saw a very strong uptick in the broad industrial base of accounts which is something that we had actually discounted and said would go the other way. So naturally since we had such an upside in Q3 we are expecting that to be down this quarter.
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